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visiongain estimates that £90 million ($163m) was spent in the UK on Ringtones |
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NewsreleaseDate:
2004-11-16
San Francisco, CA and London, UK; 16 November 2004 – visiongain.
According to the latest visiongain report " Mobile Music Downloads: Analysis and forecasts, 2004-2009", Mobile music, in the basic and limited form of ringtones, has been a key application and one of the most successful revenue generators in the wireless internet world. However now more sophisticated music applications, such as downloading music files, will be greeted with the same enthusiasm and willingness to pay.
‘True’ mobile music is divided into two segments: downloading and streaming, both of which are still in early stages of development in the mobile space. Visiongain believes that while streaming music has limited potential, particularly over GPRS networks, the ability to download full audio tracks represents a significantly more viable long-term revenue opportunity.
With full track audio downloads, operators are not just in the Personalisation business, they are also entering the music distribution business. With master tapes, an operator would have to pay 40% of gross revenue to the record label and (in the UK) 15% to the licensing copyright organisation. A further 17.5% in VAT taxes leaves the operator with a 40% share, which it will have to use for hosting, customer service and marketing costs. In the face of such slim margins, compromise between operators and record label will be essential.
In the UK for instance, where a ringtone costs almost $5 to download, the value of CD single sales fell by 33.6% to £64.4 million ($116.7m) in 2003, while estimates indicate that £90 million
($163m) was spent in the UK over the same period on ringtones. Such has been the success of the ringtones that there are rumours that sales of ringtones will soon be included in the singles chart.
Other factors, including revenue sharing models, revenue expectations and digital rights management, will need to be addressed before music downloads can be positioned as an attractive, viable and profitable service. “There is also the question of user demand and acceptance. Through a targeted, focused approach, mobile music downloads will help facilitate a market worth nearly $1 billion by the end of this decade”, comments Goran Nastic, Telecoms report analysis.
The issue of revenue share will represent a major obstacle between the mobile and the music industries. The established ringtones value chain rarely involves music labels. “Numerous independent service providers sell ringtones to operators, who generally take a 30-40% cut. Once the collection society has taken its 7-15%, 45-60% remains for the mobile operator to share between itself and its content or technology partners”, adds Nastic.
For mobile music downloads to succeed, a number of issues need to be resolved and hurdles overcome. Music phones will have to compete against dedicated MP3 players that offer superior experience and performance. Furthermore, these portable MP3 players in conjunction with iTunes and other online music services are defining the music space, limiting mobile operator’s pricing options for mobile music downloads. Pricing full track downloads via the cellular channel in a way that is both profitable and attractive to the end-user is a major challenge.
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If you are interested in an overview of ” Mobile Music Downloads: Analysis and forecasts, 2004-2009” - Please send an email to Ms. Senh Ip Senh.ip@visiongain.com including: full name, Title of publication, contact telephone number, Email, and details of where you saw this release. Upon receipt of this information, an overview will be emailed to you.
Background:
Visiongain is one of the fastest growing and most innovative independent media companies in Europe today. Based in London, UK, visiongain produce a host of business-2-business conferences, newsletters, management reports and e-zines focusing on the Financial markets, the Pharmaceutical, Telecoms industries and currently the Defence sector.
Visiongain publish reports produced by their in-house analysts of qualified experts in their field. Visiongain have firmly established themselves as the first port-of-call for the business professional, who needs independent, high quality, original material to rely and depend on.
Visiongain also have an event division, b2b Conferences, works in tandem with their analytical reports to provide a forum for key issues within the Telecoms and Pharmaceutical professionals.
For more Telecommunications information, please contact our website on: www.ewirelessnews.com
For information on visiongain, please visit the website: www.visiongain.com
For additional information contact:
Ms. Senh Ip
visiongain publishing
40 Tooting High St,
London SW17 ORG, UK
Tel: +44 (0) 20 8767 6711
Fax: +44 (0) 20 8767 5001
Email: Senh.ip@visiongain.com
www.ewirelessnews.com/index.html
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